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Mortgages Explained
A mortgage is a loan secured on a property, also known as a home loan. A mortgage is usually acquired from a lender to buy residential property. However it is becoming increasingly popular for existing homeowners to switch mortgage lenders without moving home - this is known as remortgaging .
Mortgages are long term secured loans usually repaid over a fixed period known as a mortgage term. Not all mortgages run over a fixed term. Flexible mortgages allow the borrower to pay the mortgage off early or in some cases late. With a flexible mortgage the borrower may also be able to make early payments, take payment holidays and even borrow back some of the home loan.
Getting the best mortgage deal In recent years the number of different mortgage deals available has increased, creating a multitude of different mortgage options. These include a number of different repayment options, interest rates and incentive offers. This increased choice of mortgages has caused remortgaging to increase in popularity in recent years. With mortgage lenders offering introductory incentives and interest rate discount borrowers are now starting to treat mortgage lenders much more like gas and electricity suppliers - Shopping around carefully in order to make massive long term savings.
Types of Mortgages
There are two main "types" of mortgage available in the UK. These are:
There are also mortgages that combine these two together, allowing the borrower to pay only interest in the early stages of the mortgage and pay more of the capital as the mortgage term goes on. These are known as
low start mortgages.
As well as these two main types of mortgage there are several other mortgage products available, which can also be combined:
These can be combined in different ways. For instance some lenders may offer cash-back on an offset mortgage, and most mortgages today are flexible, so many lenders will offer flexible current account mortgages for example.
There are also these three types of interest only mortgage:
Mortgage lenders also offer these types of mortgage for a short period at the start of mortgage terms to attract new customers.
These types of mortgage rates usually last for between 1 and 5 years:
How do I choose a mortgage?
With all these mortgage options available it can be difficult to choose the right deal for your circumstances unless you are an expert. An online mortgage resource is a good place to start. You can compare the different mortgage lenders and brokers, apply online, and find out what all these new available mortgage options are. Mortgages are now available for people wishing to buy-to-let, people with no deposit wishing to buy a home, people with adverse credit history, people who already own a home and want to switch lenders and of course your average home movers and first time buyers.
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